Section 563.053. Board Composition.

(a) The board is composed of five directors.

(b) One director must be a member of the commissioners court appointed by the court at its first meeting of each county fiscal year.

(c) Four directors are elected by voters in the county. The elected positions are designated as positions 1, 2, 3, and 4. Elected directors serve two-year terms with the terms of positions 1 and 3 beginning October 1 of each odd-numbered year and the terms of positions 2 and 4 beginning October 1 of each even-numbered year. A candidate must be a qualified voter of the county.

(d) An election shall be held on the second Saturday of each September to fill the appropriate director positions.

(e) The commissioners court shall appoint temporary directors to serve until the initially elected directors take office.

Section 563.058. Utility System's Budget.

(a) The president of the board, with the assistance of the business manager, shall propose a budget for each utility system under the board's control that includes for the next fiscal year of the county:

(1) the anticipated revenue of that utility system by each source; and

(2) the expenses of that utility system and the board.

(b) The president shall submit the budget to the board not later than June 1 of each year.

(c) The board shall:

(1) schedule a public hearing to consider the budget not later than July 1 of each year;

(2) adopt a final budget not later than July 15 of each year; and

(3) submit the final budget to the commissioners court for consideration as a part of the county budget.

(d) Until the county budget is adopted, the budget for each utility system is the same as the budget for that system in the preceding fiscal year. If a system's preceding budget was for a period shorter than a complete fiscal year, the budget for that system is increased proportionally to cover a fiscal year.

(e) The board and the commissioners court shall include in the budget an amount sufficient to pay and secure any outstanding obligation under this chapter to the extent the obligation is payable from the revenue of a utility system.

Section 563.059. Deposit Of Revenue.

(a) Except as provided by Subsection (b), the treasurer of the board shall deposit all revenue from a system operated and managed by the board to the credit of one or more separate accounts in the county depository.

(b) The treasurer may deposit amounts set aside for the payment or security of obligations issued on behalf of the board with the paying agent as provided by the order authorizing the issuance of the obligations.

Section 563.060. Disbursement Of Utility System's Money.

(a) The board in its bylaws shall provide procedures under which money the board deposits in the county depository may be spent only after the board has determined that the money for payment was properly budgeted. Approval of the board is not required for the transfer of money to a paying agent to pay and secure an outstanding obligation.

(b) A check issued by the board must be signed by at least two persons, at least one of whom is an officer of the board.

Section 563.061. Rates And Charges.

The board may establish rates and charges for services, fees for connections, security deposits, and other charges required for efficient operation of each utility system for which it has responsibility.

Section 563.063. Extension Or Improvement Of System.

(a) The board may provide for an extension or improvement to a utility system.

(b) The board may not provide for the extension of service to an area within the boundaries or extraterritorial jurisdiction of a municipality or within a conservation and reclamation district created under Section 59, Article XVI, Texas Constitution, without the consent of the governing body of the municipality or district.

(c) The service area of the board may not include territory that on June 6, 1993, was served by another utility under a certificate of public convenience and necessity unless the certificate ceases to be effective.

Section 563.064. Purchase Of Water Or Wastewater System.

With the approval of the commissioners court, the board may purchase an existing privately owned wastewater collection and treatment system or water supply and distribution system that supplies retail utility service in the county.

Section 563.065. Abolition Of Conservation And Reclamation District.

(a) With the consent of the directors of a conservation and reclamation district located in a county, the commissioners court of the county may assume the outstanding obligations of the district and provide for the abolition of the district.

(b) The territory of the former district remains secondarily liable for the payment of any taxes pledged to the payment of an outstanding debt of the former district until the debt is paid or payment has been provided for, including refunding by the county. The commissioners court as the successor to the district shall impose those taxes in the territory of the former district.

Section 563.066. Authority To Issue Ad Valorem Tax Obligations.

(a) The board may not incur or issue an obligation that is payable, in whole or in part, from ad valorem taxes.

(b) The commissioners court of the county by order may authorize on behalf of the board the issuance of obligations payable in whole or in part from ad valorem taxes to acquire, improve, repair, or extend the county's wastewater collection system, treatment system, water supply and distribution system, or solid waste collection and disposal system.

(c) An order under Subsection (b) must be adopted at a regular meeting of the commissioners court.

(d) If the obligations authorized under this section are payable from ad valorem taxes and revenue, the board must also approve the issuance of the obligations.

Section 563.102. Additional Bond Security.

(a) Bonds issued under this chapter may be secured additionally by an encumbrance on part or all of the physical property of the wastewater collection and treatment system or water supply and distribution system and each right relating to that property, vesting in the trustee the power to:

(1) operate the property;

(2) sell the property to pay the debt; or

(3) take any other action to secure the bonds.

(b) Regardless of an encumbrance on the property, a trust indenture on the property may:

(1) contain any provision that the commissioners court prescribes for the security of the bonds and the preservation of the trust estate;

(2) provide for amendment or modification of the trust indenture; and

(3) provide for investment of money from the wastewater collection and treatment system or water supply and distribution system.

(c) A purchaser under a sale under the encumbrance on the physical property:

(1) is the absolute owner of the property and the rights purchased; and

Section 563.103. Contents Of Order Or Resolution Authorizing Issuance Of Bonds.

(a) An order or resolution of the commissioners court authorizing the issuance of bonds, including refunding bonds, under this chapter may:

(1) provide for the flow of funds and the establishment and maintenance of an interest and sinking fund, a reserve fund, or another fund;

(2) prohibit the further issuance of obligations payable from the pledged revenues or reserve the right to issue additional bonds that are on a parity with, or subordinate to, the lien and pledge on the revenue being used to support the bonds being issued; and

(3) contain any other provision determined by the commissioners court.

(b) The commissioners court may make covenants with respect to the bonds, the pledged revenues, and the operation and maintenance of any facilities the revenue of which is pledged.

Section 563.107. Exemption From Taxation.

A bond issued under this chapter, any transaction relating to the bond, and profits made in the sale of the bond are exempt from taxation by this state or by a municipality or other political subdivision of the state.

Section 563.154. Authority To Deposit With Paying Agent.

(a) In an order or resolution authorizing the issuance of refunding bonds, the commissioners court may provide that proceeds from the sale of the bonds are to be deposited with the person at whose location the bonds to be refunded are payable.

(b) If the authorization includes a provision authorized by Subsection (a), the commissioners court may issue the refunding bonds before the cancellation of the bonds to be refunded. The commissioners court shall deposit with the person at whose location the bonds to be refunded are payable an amount sufficient to pay the principal of those bonds and interest on those bonds accruing to the maturity date or to the option date if the bonds have been called for payment before maturity according to their terms.

(c) The comptroller shall register refunding bonds issued under this section without the surrender and cancellation of the bonds to be refunded.